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Just this year, a Chinese firm acquired the personal computer business of IBM Corp., and a consortium led by a large Chinese conglomerate investigated-but dropped-the idea of buying appliance maker Maytag.

Though they involved long-standing and cherished American brands, neither deal raised too much reaction from American business executives or politicians in Washington. By contrast, when China's CNOOC Ltd. offered in June to acquire California-based Unocal, all hell broke loose.

Immediately following the bid, members of Congress demanded that the offer be reviewed by the Committee on Foreign Investment in the United States, a group that was created to study deals with an eye toward how they might affect national security.

In addition, the House approved a resolution asking the president for a thorough review of the deal, and several senators sent Bush a letter July 19 expressing concern about the energy implications.

And, in a small salvo from the corporate sector, the U.S. brokerage firm William Blair & Co. sold its entire holding in CNOOC stock for $160 million. A spokesman for Blair, CNOOC's largest nongovernment shareholder, explained the sale by saying the Chinese company's bid seemed to be based more on government policy than on good business.

Apparently, it's OK to have a global economy, as long as the business deals it spawns don't involve oil.

Perhaps rightly, government officials appear concerned that the Chinese government is trying to horde oil to fuel the growth of its booming economy, a development that could affect U.S. oil supplies in the future.

They also fear that, if CNOOC is successful, it may have access to assets and technology that are important to the U.S. military and national security. Considering China's history with the United States, its communist system and its record on human-rights issues, the concern may be justified.

Or, is it paranoia?

At this point, the firestorm may be moot. On July 19, Chevron, which already had an offer for Unocal on the table, raised its previous bid, and both U.S. oil companies have urged shareholders to vote in favor of their deal, despite the fact that CNOOC's all-cash offer appears more favorable for Unocal shareholders.

No matter how you come down on the issue, it certainly raises the question, "Where do we go from here?" The Unocal story highlights questions that will continue to face us in a global economy as entities from China or other communist or socialist countries try to buy American businesses.

In addition to security issues, a real concern is whether U.S. businesses are playing on a level field against government-backed corporations. Opponents of the CNOOC bid argue that it is receiving favorable government loans to finance its bid, an advantage not shared by Chevron in our free-enterprise system.

In its reporting of the situation July 20, the Los Angeles Times noted an interesting irony.

"Some experts say these conflicts with China are the inevitable result of U.S. policies that have produced large American trade and budget deficits," the newspaper reported. "The former has fattened China's stockpile of foreign currency; the latter has encouraged China to invest heavily in U.S. Treasury securities sold to finance the government debt."

A University of Maryland trade expert added, "As long as we are asking them to finance us, to the tune of hundreds of billions a year, it can't be too shocking they want to put the money in some solid assets as well as some financial assets."

As it turns out, we are not alone in this conundrum. In another twist of irony, French government officials are worried about serious rumors that the American conglomerate Pepsico is about to launch a hostile takeover of Group Danone SA, the French maker of Evian bottled water and Dannon yogurt.

Welcome to the global economy and the 21st century.

Katterjohn is publisher of IBJ.To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to ckatterjohn@ibj.com.

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